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apply to the report of a component auditor issued as a result of work performed on the financial information of
a component at the request of a group engagement team for purposes of an audit of group financial statements.
2A. Objective of the Auditor: The objective of the auditor, when applying SAs, in such an audit, is to address
appropriately the special considerations that are relevant to the acceptance of engagement, planning and
performance of engagement, and forming an opinion and reporting.
2B. Not Objective of the Auditor: The objective is not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control.
What is a Single Financial Statement?
A single financial statement is to be distinguished from a complete set of financial statements. For example, a
cash flow statement is a single financial statement
What is the Element of a Financial Statement?
Definition of Element of a Financial Statement: “Element of a financial statement” or “element” means an
“element, account or item of a financial statement.” For example, trade receivables or cash and bank balances.
Inclusion of Related Notes: A single financial statement or a specific element of a financial statement includes
the related notes ordinarily comprising a summary of significant accounting policies and other explanatory
information relevant to the financial statement or to the element.

(CNO SA- 805.040) Considerations When Accepting Such Engagement
Application of Sas

1A. Ethical requirements & SA compliance: SA 200 requires the auditor to comply with (a) relevant ethical
requirements, including those pertaining to independence relating to financial statement audit engagements,
and (b) all SAs relevant to the audit.
1B. Exception: It also requires the auditor to comply with each requirement of an SA unless, in the circumstances
of the audit, the entire SA is not relevant or the requirement is not relevant because it is conditional and the
condition does not exist.
1C. Departure: In exceptional circumstances, the auditor may judge it necessary to depart from a relevant
requirement in an SA by performing alternative audit procedures to achieve the aim of that requirement.
1D. Irrespective of situation: SA 200 requires the auditor to comply with all SAs relevant to the audit. In the
case of an audit of a single financial statement or of a specific element of a financial statement, this requirement
applies irrespective of whether the auditor is also engaged to audit the entity’s complete set of financial
statements.
2. Challenges when the auditor is not also engaged to audit the entity’s complete set of financial statements
Practicability of Audit in Accordance with SAs: If the auditor is not also engaged to audit the entity’s complete
set of financial statements, the auditor shall determine whether the audit of a single financial statement or of a
specific element of those financial statements in accordance with SAs is practicable.
2A. Understanding of the Entity and Its Environment: In such cases, the auditor often does not have the same
understanding of the entity and its environment, including its internal control, as an auditor who also audits the
entity’s complete set of financial statements.
2B. General quality of the accounting records or other accounting information: The auditor also does not
have audit evidence about the general quality of the accounting records or other accounting information that
would be acquired in an audit of the entity’s complete set of financial statements. Accordingly, the auditor may
need further evidence to corroborate audit evidence acquired from the accounting records.
2C. Disproportionate Audit Work for Specific Element: In the case of an audit of a specific element of a
financial statement, certain SAs require audit work that may be disproportionate to the element being audited.
For example, although the requirements of SA 570 are likely to be relevant in the circumstances of an audit of a
schedule of accounts receivable, complying with those requirements may not be practicable because of the audit
effort required.

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